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ICICI Securities

Published on 9/07/2020 11:32:12 AM

Bank Nifty: 22584

Technical Outlook

* The daily price action formed a small bear candle with a long upper shadow signalling profit booking at higher levels as the index closed 500 points lower from its intraday high 23080 . The index however maintained higher high -low signalling continuation of the positive bias

* Going ahead we expect the index to hold above current week low (22040 ) and extend the up move towards 23300 levels in the coming session as it is the price parity with the previous up move of Mar -Apr (16116 to 21967 ) as projected from the low of May (17105 ) signalling upside towards 23300 levels

• The major support for the Bank Nifty is placed around 21000 levels as it is confluence of the following technical observations a) rising 50 days EMA (21020 ) (b) the lower band of the last two weeks consolidation range and (c) 50 % retracement of the current up move (19507 -22674 ) placed at 21100 levels

* India VIX (which gauges market sentiment) extended its losses and settled below 200 days EMA for the first time since February 2020 , indicating dwindling volatility, which signifies continuance of risk -on sentiment and overall positive bias in the market

* In the coming session, the Bank Nifty is expected to open on a flat to positive note on the back of muted Asian cues. The bias remain positive above current week low (22000 ) . Hence use dips towards 22380 -22440 for creating intraday long position for target of 22660 with a stop loss of 22280

* The daily stochastic remain in up trend and is currently placed at a reading of 80 thus supports the continuation of the positive bias in the index in the coming sessions .

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ICICI Securities

Published on 9/07/2020 11:31:57 AM

NSE (Nifty): 10706

Technical Outlook

* The daily price action formed an outside bar, indicating profit booking, emerged after approaching in the vicinity of our target of 10900, amid overbought condition of daily and weekly stochastic oscillator (currently placed at 86 and 91, respectively) owing to past seven sessions rally over 600 points rally

* Going ahead, breach of past three sessions identical low around 10680 would lead to extension of breather, else continuance of stock specific action, hence, we advise to stick to quality as we enter the Q1FY21 result season. Meanwhile, key resistance of 10900 would continue to act as immediate hurdle as it is confluence of 200 days SMA, at 10887 coincided with the negative gap seen during mid-March (10827–10752).

* Key point to highlight during ongoing up move off March low 7511 is that, Nifty have not formed higher high for more than seven consecutive sessions. Currently, as index have already formed a higher high over seventh consecutive session at key resistance of 10900 amid overbought conditions, we believe possibility of temporary breather can not be ruled out.

* Broader market continued to relatively outperform the benchmark as supported by improving market breadth as currently ~75% constituents of the Nifty midcap and small cap indices are sustaining above their 100 days SMA compared to last month’s reading of ~35%, signifying broader market participation that bodes well for continuance of ongoing relative outperformance

* The formation of higher peak and trough underpinned by improving market breadth, signifies elevated buying demand that makes us confident of revising support base on the Nifty at 10500 as it is confluence of a) price parity of last intermediate correction of 358 points (10553-10195) projected from Monday’s high 10813 is placed at 10446 b) 61.8% retracement of ongoing up move (10195 – 10811), at 10430 c) positive gap recorded on July 2 is in the range of (10430 -10485)

* In the coming session, volatility would be elevated owing to weekly derivative expiry. We believe, holding above past three session’s identical low around 10675 would keep pullback option open. Hence, any dip towards 10640–10662 should be used to create long position for target of 10763

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ICICI Securities

Published on 9/07/2020 11:29:39 AM

Technical Outlook

Equity benchmarks snapped their past five sessions winning streak tracking subdued global cues. Nifty settled the session at 10706, down 94 points or 0.9%. In the coming session, volatility would be elevated owing to weekly derivative expiry. We believe, holding above past three session’s identical low around 10675 would keep pullback option open. Hence, any dip towards 10640–10662 should be used to create long position for target of 10763. Going ahead, breach of past three sessions identical low around 10680 would lead to extension of breather, else continuance of stock specific action, hence, stick to quality as we enter the Q1FY21 result season. Meanwhile, key resistance of 10900 would continue to act as immediate hurdle as it is confluence of 200 days SMA, at 10887 coincided with the negative gap seen during mid-March (10827–10752). On the downside support remains at 10500 as it is 61.8% retracement of ongoing up move (10195 – 10811), at 10430.

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ICICI Securities

Published on 9/07/2020 11:29:04 AM

Bank Nifty: Positive bias to continue to prevail above 21000

* The Bank Nifty managed to close the June series on a positive note and ended marginally below the monthly highs. Private and PSU banks saw covering, providing a boost to the index. The rupee appreciated sharply from 75.6 levels to 74.95 levels. We feel it will consolidate near these levels. This will provide the required boost to the banking and financials space

* The index started the July series with a discount of almost 100 points whereas the rollover was in line with the expectation. As the series progressed, the discount in the Bank Nifty narrowed marginally, pointing towards short covering

* Huge Put OI additions are seen in 21000 strike Put, which remains the key support area for upsides to continue. Looking at the writing positions in Call, we feel the index could move towards 23000 in coming days

* The price ratio of Bank Nifty/Nifty fell marginally on the back of outperformance in the Nifty, which rallied towards 10600 whereas the Bank Nifty remained flat near 22000. However, we feel the ratio will consolidate near 2.08 levels

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ICICI Securities

Published on 9/07/2020 11:28:51 AM

Nifty: Consolidation expected above 10350 for target of 10750

* The Nifty witnessed good move above the June expiry level of 10280. The index is expected to consolidate above these levels, which may lead to a good move in specific stocks

* The noticeable Put base is currently at the 10300 strike, which also indicates towards noticeable support at these levels. The reducing volatility suggests the option writing trend, which may increase in the coming days. On the higher side, the Call positions are at the 10700 strike

* The non-banking index heavyweights have remained in focus. We believe private banking stocks may perform in patches and may not witness a sharp upward trend. Instead, a gradual move may be on the cards in these stocks

* The volatility index has started a move below 30 levels. This is good for the stability in the market. Sharp swings may not be seen in the index and it should broadly remain above 10300. Also, June and July have remained relatively low volatile months, which is seen even this year so far

* FII flows have remained absent while their outflows have been neutralised by DII inflows. The buying pattern of domestic institutions is encouraging, which suggests the stock specific moves may continue

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ICICI Securities

Published on 9/07/2020 10:51:06 AM

Global Bonds

* The Nifty snapped its five-day winning streak and ended with a loss of around 94 points. In the last one hour, intense selling was seen in industry heavyweights, which led the index to drift lower to 10700. If the Nifty is unable to hold 10600, which holds significant OI , then more downside can be seen in coming days.

* Despite starting the day on a positive note, Call writers of 23000 strike dominated the second half of the day and dragged the Bank Nifty lower. From the option front, aggressive additions were seen in 23000 strike. These levels should be strong resistance on the upsides.

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ICICI Securities

Published on 8/07/2020 2:05:45 PM

Global Bonds

* Post a flat opening, in the early hours, energy stocks witnessed selling pressure while the Nifty made a low of 10690. However, a late recovery in BFSI along with outperformance in midcap & auto stocks helped the market to recover the intraday losses

* On Tuesday, the Bank Nifty relatively outperformed the Nifty. The index rose almost 1.5% whereas private banks were the leader and midcap banks also witnessed short covering. Looking at the addition in OTM and ATM Put, we feel upsides will continue

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ICICI Securities

Published on 8/07/2020 12:29:06 PM

Bank Nifty: 22628

Technical Outlook

* The Bank Nifty outperformed and closed higher by almost 2 % on Tuesday lead by the strong up move in the private banking stocks as the private bank index closed higher by 2 . 5 % . The BANK NIFTY ended the session at 22628 , up by 429 points or 1 . 9 % . 

* The daily price action formed a strong bull candle with a higher high and a firm closing above the last two weeks consolidation range of 22500 -21000 signalling strength and continuation of the up move . • Going ahead we expect the index to extend the current up move and head towards 23300 levels in the coming weeks as it is the price parity with the previous up move of Mar -Apr (16116 to 21967 ) as projected from the low of May (17105 ) signalling upside towards 23300 levels

* The breakout from the last two weeks consolidation range and strength in the private banking stocks signifies elevated buying demand that makes us confident of revising support base on the Bank Nifty towards 21000 levels as it is confluence of the a) rising 50 days EMA (21020 ) (b) the lower band of the last two weeks consolidation range and (c) 50 % retracement of the current up move (19507 -22674 ) placed at 21100 levels

* India VIX (which gauges market sentiment) extended its losses and settled below 200 days EMA for the first time since February 2020 , indicating dwindling volatility, which signifies continuance of risk -on sentiment and overall positive bias in the market

* In the coming session, the Bank Nifty is expected to open on a flat to positive note on the back of muted Asian cues. The bias remain positive above Monday’s bullish gap area (21852-22171). Hence after a positive opening use dips towards 22360 -22420 for creating intraday long position for target of 22630 with a stop loss of 22260 The daily stochastic remain in up trend and is currently placed at a reading of 79 thus supports the continuation of the positive bias in the index in the coming sessions .

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ICICI Securities

Published on 8/07/2020 12:28:54 PM

NSE (Nifty): 10800

Technical Outlook

* Equity benchmarks extended their winning streak over a fifth consecutive session. The Nifty ended the session at 10800, up 36 points or 0.3%. The market breadth turned flat. However, broader markets continued to outperform as the Nifty midcap and small cap rose 0.4% and 1%, respectively. Sectorally, IT and financials outshone while metal and FMCG underperformed. 

* The daily price action formed a long legged Doji like candle, indicating elevated volatility at higher levels. In the process, the Nifty retested the breakout area of upward sloping trend line (seen during last session) and recovered 124 points from day’s low (10690), signifying supportive efforts at elevated levels

* Going ahead, we reiterate our positive stance as we expect the index to endure its buoyant move as long as it holds previous session’s low of 10690 (on a closing basis) and eventually head towards 10900 in coming sessions as it is confluence of 200 days SMA, at 10887 coinciding with the negative gap seen during midMarch (10827–10752). Meanwhile, we expect catch up activity to be seen in cyclical stocks

* Past six session’s up move (~600 points) helped the index to approach our earmarked target of 10900. Consequently, it hauled daily and weekly stochastic in overbought territory (currently placed at 94 and 95, respectively. Hence, we advise to stay with quality

* The Nifty midcap extended its winning streak over a seventh consecutive week supported by improving market breadth as currently ~75% constituents of the Nifty midcap and small cap indices are sustaining above their 100 days SMA compared to last month’s reading of ~35%, signifying broader market participation that bodes well for durability of ongoing relative outperformance

* Formation of higher peak and trough underpinned by improving market breadth signifies elevated buying demand that makes us confident of revising support base on the Nifty at 10500 as it is confluence of: • a) price parity of last intermediate correction of 358 points (10553- 10195) projected from Monday’s high 10813 is placed at 10446

* b) 61.8% retracement of ongoing up move (10195 – 10811), at 10430

* c) positive gap recorded on July 2 is in the range of (10430 -10485) In the coming session, follow through strength above Tuesday’s high would lead to acceleration of upward momentum, else stock specific action amid positive bias. Thus, intraday dip towards 10698–10722 should be used to create long position for target of 10824

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ICICI Securities

Published on 8/07/2020 12:28:22 PM

Technical Outlook

Equity benchmarks extended their winning streak over a fifth consecutive session. The Nifty settled the session at 10800, up 36 points or 0.3%. In the coming session, follow through strength above Tuesday’s high would lead to acceleration of upward momentum, else stock specific action amid positive bias. Thus, intraday dip towards 10698–10722 should be used to create long position for target of 10824.

Going ahead, we reiterate our positive stance as we expect index to endure its buoyant move as long as it hold previous sessions low 10690 (on a closing basis) and eventually head towards 10900 in coming sessions as it is confluence of 200 days SMA, at 10887 coincided with the negative gap seen during mid-March (10827–10752). Meanwhile, we expect catch up activity to be seen in cyclical stocks.The formation of higher peak and trough underpinned by improving market breadth, signifies elevated buying demand that makes us confident of revising support base on the Nifty at 10500.

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